This, IMHO, is the crucial point: what exactly is Yahoo's business?

As an outside watcher I have no clue (I am also stupid). Hopefully people working there have better insight than myself.

In case anyone wanted a real answer, it's just advertising, as it has always been:

http://static.tumblr.com/7drgjla/386nnw4n9/yahoo_inc._2014_a...

"We generate revenue principally from search and display advertising on Yahoo Properties and Affiliate sites, with the majority of our revenue coming from advertising on Yahoo Properties. Our margins on revenue from advertising on Yahoo Properties are higher than our margins on revenue from advertising on Affiliate sites as we pay TAC to our Affiliates. Additionally, we generate revenue from other sources including listings-based services, facilitating commercial transactions, royalties, and consumer and business fee-based services."

The REAL answer is "a tax efficient proxy for holding Alibaba shares".

This is the correct answer.

Matt Levine did quite a long writeup about this a while back: http://www.bloombergview.com/articles/2014-04-17/how-can-yah...

Taking an uncharitable view, Yahoo!'s core business actually has negative value -- and the current round of layoffs is a direct result of Wall Street pressure to stop subsidizing said core business and preserve the value of the Ali Baba stock.

Alibaba's market cap is $174B. Yahoo owns 24% of their stock. That's $41B of wealth right there. That's actually more than their own market cap, which is $28B!

I imagine the natural duopoly of tech is at work here. Google/Bing is pretty much it for web searching in the US, with no room for whatever engine Yahoo is borrowing this week. Gmail (gmail.com, google business apps, etc)/MS(Outlook/Hotmail, Azure, Exchange 365) for mail, etc. Not sure where Yahoo even fits anymore.

> Alibaba's market cap is $174B. Yahoo owns 24% of their stock. That's $41B of wealth right there.

That last trade price times number of outstanding shares -- market cap -- is the only common basis for overall valuation of publicly traded firms (that is, the only basis that is guaranteed, by definition, to be available for every publicly traded firms) does not mean it is a particularly accurate and meaningful measure of the overall value in any useful sense.

It does illustrate the point that Yahoo's wealth is really in its holdings. Yahoo as a company really doesn't produce much, or anything, of positive value.

In terms of actual money, that's not wrong. The core operations are at about break-even per the 2014 report:

http://i.imgur.com/f23T3Xc.png

... I didn't even know they had a real-estate site. This is their principal revenue source?

Sports. Depending on who you ask, they're the first[1] or second[2] most popular sports website in the world.

[1] http://www.ebizmba.com/articles/sports-websites

[2] http://www.alexa.com/topsites/category/Top/Sports

finance.yahoo.com is pretty decent, too. Based on ghostery blinken, they're not as pathological in their tracking as some other major sites.

Everyone uses Yahoo finance and watches yahoo stock go down, what irony.

Yahoo sports is good. Their fantasy sports are huge. Their finance is also probably the most visited.

They don't have a business, at least not one that can support the number of employees they have. Their business is actually worth negative dollars. The only thing that was keeping their value high was their Alibaba investment.

This is an off quoted, frequently misunderstood statement.

If you assume zero discount of the Alibaba stake due to taxes or other uncertainty, then Yahoo has zero or negative value.

However, there is >0% chance that the Alibaba stake will be taxed or that Yahoo leadership will sell and spend the money instead if returning it to the shareholders.

The more accurate statement is that the uncertainty a "core" business brings outweighs the value of said business. Part of that uncertainty is the tax treatment issue of BABA shares, the other part is a vote of (or lack of) confidence in Yahoo leadership.

Yahoo itself has plenty of value. Probably not 10B, but probably more than 1B.

If this was true you would be able to purchase Yahoo without AliBaba stocks for $1Billion. However if you walked in with a Billion dollar check and that offer, you will not get a meeting.

What's good for the shareholders and what's good for management are two separate things.

They keep calling themselves a "media company", but they've done such a terrible job at delivery (of media and vision) that it wouldn't surprise me if most people working there don't even know what the company is about.

Recently I tried watching Yahoo's Other Space (https://screen.yahoo.com/other-space/), but gave up after a few episodes - even though I enjoyed what I was able to watch. From what I could tell, the show wasn't available through the Yahoo Screen mobile app. (Which brings another question, WTF is the point of that app?!) The website lets you watch streaming video, but the site is impossible to use from mobile, and it would randomly crash every iOS browser I tried (Safari, Chrome, Firefox). When I tried watching from a desktop the video stream would occasionally freeze, and the Ads would randomly reset the stream back to the beginning of the episode.

I love the show Community. I watched like three episodes of the new season and stopped. The weekly release model is just dumb. They made it nearly impossible to watch via Chromecast as well. At some point I lost interest in getting past their obstacles and just stopped watching.

Yahoo reminds me of Apple in the mid 90's. Even good ideas are just terribly executed. They hired the wrong leader to try and fix their problems.

I watched the entire season of Community on Yahoo TV on my AppleTV. I never saw a single ad-either before/during/after the video, or in the app itself. They spent a ton of money to get Community and that awful Goop thing from Gwyneth Paltrow but there was no attempt to monetize it as far as I could see. Quite the head scratcher.

> This, IMHO, is the crucial point: what exactly is Yahoo's business?

Keeping the C-levels employed?

I've never paid much attention to Yahoo!. It might be that cheesy logo just made me discount their seriousness when they started. Like when the print Wired was first out, they had different text colors and fonts, sometimes in the same paragraph.

I think Yahoo's business has been to be the internet, but they never noticed that other companies and services took that all away from them piece by piece. Now they're just a stock.

The most valuable part of yahoo to me is groups.yahoo.com. It's works somewhat like USENET, but includes a group-specific files section. There are some groups with information which exists nowhere else.

It sucks that this is locked into yahoo, but I'm sure it was the most convenient option at the time.

They own tumblr, and a ton of alibaba shares.

And only one of those is valuable.

Well they get a lot of non-Asian revenue still so it comes from somewhere.

"Having no work is a leadership problem."

Oh man is that true, especially in the case of a supposed Internet ecosystem that's got issues with keeping properties up to date and coherent. Surely some of these properties have product managers that have not fallen asleep, and who are in tune with how to keep their products relevant, who have features they want to implement.

Being "overstaffed" in an environment full of poachers means your C-suite hasn't got a plan, or even remained connected with product management to make small-ball plans. They may find that renovating their slummy properties doesn't pay off. But this smells more like cleaning up the results of senior management lackadaisy than a purposeful trimming.